Gold Price - Where is it heading?

[rederob]

POG monthly is below:
We are not far off the 2 best months ever in POG's ascent, previously July and August 2011.
In percentage terms an equivalent movement would take POG to $2550. Furthermore, if we looked at the respective launching points for POG in October 2008 (to 2011) and November 2022 (to today), and applied a similar percentage increase, then we see POG tipping over $3000 in months ahead.
Interestingly, the record high POG has not translated into miners also hitting record prices.

 

[rcw1]

Onwards and upwards...

$US 2,412.80

 

[rederob]

Spot gold hovered near and on the $2400 price point for many hours before pulling the trigger to smash higher.
Quite a few hours to go before market close, but peaking well over $2425 was a nice way to finish my Friday night.
Spot gold 10 minute chart below:

I will leave the technical analysis for others.
This has been an irrational move upwards and it will be interesting to see if the previous 2 months high I mentioned earlier will be surpassed in April.

 

[ducati916]

jog on
duc

 

[rcw1]

Good morning

Coyote got the road runner....

 

[rederob]

What a difference a morning makes. Spot gold price dropped like a stone - almost $100 or 4% - since last post around 6 hours ago.
Here's the same chart (which is actually 15 minutes and not 10 as I said above):


Given our gold miners barely kicked upwards on POG's massive rise in price, maybe they won't be moved by the huge decline near market close.

 

[rederob]

View attachment 174699

jog on
duc

I was listening to a podcast this morning from Wheaton Precious Metals who made a number of interesting points.
First, POG has held up while the USD has also been high because of central bank buying.
Second, BRICS and a number of smaller nations have moved significantly away from the USD and towards gold. There is an increasing trend to protect a nation's wealth with physical gold holdings rather than a decreasingly used US fiat currency.
Next, the silver:gold ratio will continue to favour gold as a result of both central bank buying and investor inflows.

An interesting irony is that high gold prices actually make it more desirable rather than less desirable for central banks to buy more gold as it bolsters gold's implied value. This is the opposite of what occurs with a fiat currency which has to be continuously printed without a realistic physical backing to its value.

 

[rcw1]

Good morning,

Anecdotally, for mine, NAB economists attribute gold’s ascent to increasing purchases by central banks, along with investor demand for the safe-have asset, reflecting shifting market expectations around inflation and interest rates alongside geopolitical tensions. (AFR 12/04/24).


Kind regards
rcw1

 

[DaveTrade]

The Gold Rally Has Only Begun

Stocks fell on Friday, with the tech sector losing steam and investors grappling with a mixed bag of bank earnings.
The Nasdaq Composite tumbled by 1.3% while the broader S&P 500 index slipped by 1%. The blue-chip Dow Jones Industrial Average retreated 0.9%, shedding over 300 points.

The pullback followed a strong Thursday session where the "Magnificent Seven" tech giants led the charge, buoyed once again by the AI hype. Sentiment was also boosted by a lower-than-feared increase in the Producer Price Index, coming on the heels of an alarmingly hot consumer inflation print that had rattled markets.

As earnings season gets underway, investors are poring over financial results from the banking giants, trying to gauge the potential fallout if interest rates stay higher than anticipated throughout the year.

Asset management titan BlackRock got the ball rolling before the opening bell, with shares initially perking up in pre-market trading after the firm reported a hefty 36% jump in quarterly profit. However, the stock quickly reversed course, sliding nearly 2% as the regular session began.

JPMorgan Chase, despite beating earnings expectations, saw its shares dip as CEO Jamie Dimon highlighted "inflationary pressures" and the Fed's monetary policy as key risks. Wells Fargo and Citigroup also traded in negative territory following their respective quarterly updates.

Amid the stock market turbulence, precious metals continued to shine bright. Gold prices vaulted above the $2,400 mark, notching a fresh all-time high. Silver also caught a bid, hitting its loftiest level since early 2021. The surge in demand for safe-haven assets comes as investors fret about escalating tensions in the Middle East while shying away from U.S. Treasuries due to stubborn inflation concerns.

Bank of America's commodities strategist Michael Widmer argues that gold and silver rank among their top commodity picks. He sees the yellow metal being propelled higher by central bank purchases, Chinese investors, and increasingly, Western buyers responding to a confluence of macro drivers, including the wind-down of rate hike cycles.

Against this backdrop, BofA envisions gold surging to $3,000 per ounce by 2025. Widmer points out that while macro factors are fueling gains, traditional market segments crucial for sustaining rallies have been lagging. Holdings in physically-backed ETFs have been waning, and net non-commercial positions are stuck in a range.

The strategist believes that investors are holding out for rate cuts, and once those materialize, gold buying should broaden out, likely catapulting prices even higher. He also notes that Western buying may need to step up if sentiment improves in China and less money finds its way into gold.

Interestingly, the long-standing positive correlation between gold prices and physically-backed ETF holdings has broken down, with assets under management in these vehicles actually declining. A closer look reveals that investment advisors, often a proxy for retail investors, have been driving the bulk of the outflows.

Similarly, on the institutional front, net commercial futures positions have stayed well below the peaks seen in recent years. Widmer thinks silver stands to benefit as well, with prices getting an extra lift from robust industrial demand. He sees the potential for silver to break above $30 an ounce within the next 12 months.

Lackluster investor interest is one factor at play, as evidenced by the stagnant holdings in physically-backed silver ETFs. This trend is mirrored in subdued net non-commercial positions on the CME, muted trading volumes on Chinese exchanges, and tepid U.S. coin purchases.

However, there are encouraging signs on the commercial demand front, which could eventually lure investors back and reinforce BofA's bullish outlook for the white metal in the coming year.

The bank believes that a stabilization in the global economy over the coming months would be supportive for the silver market. Imports into key markets like Japan and the U.S. are already bouncing off their lows and could trend higher from here. In a similar vein, China flipped from being a net exporter of silver in early 2022 to seeing those outbound shipments dwindle by year-end.

Coinciding with this shift, silver is no longer fetching a discount in the Chinese domestic market.

BofA's optimism on precious metals is shared by other market heavyweights. UBS recently delved into the current gold breakout and its potential implications, noting that prices tend to surge 2-4x within a compressed timeframe during these episodes.

The Swiss bank points out that gold took 27 years to revisit its 1980 peak before breaking out in 2007. More recently, it was a 13-year journey back to the 2011 high when the metal broke out in March 2024. However, once the floodgates open, the rallies can be explosive - gold quadrupled in the span of two years during both the 1972-74 and 1978-80 episodes, and it doubled in three years from 2008 to 2011.

UBS suggests that if history repeats itself, it's not too late for investors to jump on the gold bandwagon. Those with a 2-3 year horizon could potentially see prices double from current levels to north of $4,000 an ounce.

The key sell signal would be the advent of negative real rates and a full-blown recession. But with real rates still elevated and a downturn seemingly distant, UBS argues it's premature to call an end to the gold bull run.

Beyond the compelling chart patterns, the bank sees gold's breakout as an ominous portent of trouble on the geopolitical front. Against the current backdrop, it's not hard to envision a range of unnerving risk scenarios unfolding.

As for the broader markets, UBS cautions that if the gold playbook holds true, many assets look mispriced with a multi-year outlook - from incredibly tight credit spreads to stretched equity valuations and depressed volatility.

While investors may need to keep dancing as long as the music plays, to borrow a phrase from Chuck Prince, it's clear that the gold market has sounded the alarm.

And of course, we have to touch on Goldman Sachs, which came out swinging this morning. The bank notes that copper and gold held their ground after the PPI print despite the backup in yields and the dollar flexing its muscles.

Goldman doesn't see sustained greenback strength materially denting copper, given how bullish the fundamental story remains. As for gold, the bank has long contended that it outperforms during easing cycles - and we haven't even seen any cuts yet. That outperformance looks set to persist, underpinned by central bank demand, the U.S. fiscal situation, and potential geopolitical tailwinds.

In fact, the venerable firm released a fresh report today, lifting its year-end gold forecast to $2,700 on the back of "unsurprising resilience."

The metal's impressive ability to hold steady after the upside inflation surprise was yet another sign that this bull market is marching to a different beat. Gold has surged 20% over the past couple of months despite the Fed taking a more hawkish turn, growth expectations firming, and equities hitting record highs.

None of the usual macro culprits - real rates, growth, or the dollar - can adequately explain the ferocity of the rally thus far in 2023. But Goldman argues that this substantial deviation from traditional valuation models is neither a new development nor evidence of froth.

Instead, the lion's share of gold's gains since mid-2022 have been powered by incremental physical drivers like a marked acceleration in central bank purchases by emerging markets and resurgent retail demand in Asia.

Those tailwinds remain very much intact, reinforced by the current macro and geopolitical backdrop. Throw in the prospect of Fed easing acting as a spark for ETF inflows later in the year, plus the wild card of U.S. election risk and a precarious fiscal position, and gold's path of least resistance clearly skews higher.

 

[Sean K]

Thank God that stopped and some sanity clicked in. Maybe some punters thought it might be a good idea to take some profits.

Well overdue correction and consolidation. It could go down much more to some support levels on USD POG and against other currencies.

But, there are some significant factors at play.

Things could get volatile.

 

[ducati916]

I was listening to a podcast this morning from Wheaton Precious Metals who made a number of interesting points.

1. First, POG has held up while the USD has also been high because of central bank buying.

2. Second, BRICS and a number of smaller nations have moved significantly away from the USD and towards gold. There is an increasing trend to protect a nation's wealth with physical gold holdings rather than a decreasingly used US fiat currency.

3. Next, the silver:gold ratio will continue to favour gold as a result of both central bank buying and investor inflows.

1. And WHY are CBs buying more gold? The answer is primarily energy. If you can purchase your energy (oil) in your home currency and settle in trade balances with any deficit settled in gold (gold being used as a reserve asset), then your currency is floating as to gold. Your currency then comes under your own control. No longer will your currency be inflated/deflated by the USD. No longer will you have to accumulate USD or UST. You simply accumulate gold. Your currency may inflate or deflate as against gold, but it is your choice, not the Federal Reserve or US Treasury making that choice for you.

Simply: Gold is now (or fast becoming) the oil currency. As the oil market is now some 14X larger than the gold market, that is the price differential that will close over time.

China is driving the break of oil being priced only in USD.

This week, lot's of action:

Yellen just returned from China: https://home.treasury.gov/news/press-releases/jy2232



Will China go along with this?

No chance: https://www.scmp.com/economy/china-...-avoid-cautionary-tale-japan-and-plaza-accord



So how can Yellen get a weaker USD if China will not revalue the CNY higher?




As already stated, China will not float the CNY against the USD. But China are already floating it against gold.



So if Yellen wants CNY up and USD down, all she needs to do is let the USD float FREELY against gold. This of course has not been the case:

So of course, the 'Paper Gold' market: https://reaction.life/dont-forget-the-golden-rule-whoever-has-the-gold-makes-the-rules/



The paper market was established in 1974:





However, you cannot (if you are an in-the-loop banker) let gold just run free when the banking system is short billions of USD paper gold. You have to close down unallocated paper positions.

The end of the LBMA is nigh - Research - Goldmoney

Basel 3 is on course to regulate the LBMA out of existence. And with it will go all the associated arbitrage business and position-taking on Comex, because most bullion bank trading desks will cease to exist. The only supply to buy-side speculators of gold and silver contracts will be...

www.goldmoney.com

What's behind China's gold-buying spree? – DW – 04/05/2024

For more than a year, China's central bank has been buying up large amounts of gold. The move, along with the wars in Ukraine and Gaza, have helped spike the price of the precious metal to new highs.

www.dw.com

Which is fine as far as it goes, but it really misses the point:

If the US cap the POG in USD terms and China lets the CNY float freely against gold, the CNY will weaken against gold, but, Chinese gold buys MORE OIL because China can settle net-net in gold for oil than does US gold, which is capped.

The above is actually China running a limited OPEN CAPITAL account.

Renminbi Usage in Cross-Border Payments: Regional Patterns and the Role of Swaps Lines and Offshore Clearing Banks

The paper examines the usage of the Renminbi (RMB) as an international payment currency. Globally, the use of RMB remains small, accounting for 2 percent of total cross-border transactions. Using country-level transaction data from Swift** for 2010–21, we find significant regional variations in...

www.imf.org

Now these locations have CNY clearing facilities and major gold trading hubs.



Voila...you have a limited open capital account.


2. The smaller BRICs are doing EXACTLY the same thing. Buying oil in their home currency and settling net-net in gold. Their currencies then weaken as against gold. Their Central Banks are buying gold. All will eventually capitulate and buy gold to buy oil. Japan will likely be next. If/when they do, that's it, the US will have to capitulate also.


3. This really depends on whether retail adopt silver as a poor man's gold to exit their countries fiat currency. China and India will do so I think, they have that recent and current history. The West has forgotten. Possibly it wakes up. A higher silver price is actually far more dangerous than a high gold price. Silver has a far wider industrial use. A significantly higher silver price has economic consequences. Gold never lost its monetary use. Silver did. If silver rediscovers its monetary heritage, watch out.

So in a 4 sentence summary:

Gold is now an oil currency.

The world economy cannot handle $100 oil, millions would starve to death.

The world will not even blink at $10K gold, gold has no other uses.

With a higher POG the POO falls in fiat terms.

jog on
duc

 

[Garpal Gumnut]

The recent pullback in price is normal for a bullish move and often suggests support lines in a bull run.

I believe the Persian cousins have commenced a large drone attack on the Israeli cousins.

Geopolitical fundamentals in the short ( and long term as @ducati916 has pointed out re China and BRICS currency/Gold moves ) will determine the POG.

The open overnight and tomorrow morning will be bullish.

gg

 

[Dona Ferentes]

.

I believe the Persian cousins have commenced a large drone attack on the Israeli cousins.

war by other means

Shahed drones are relatively slow. It will take hours for them to reach Israel, but it is very possible that the objective of that swarm is to oversaturate the Israeli air defense so that ballistic and cruise missiles might get through. These are the same tactics Russia is using against Ukraine.

 

[ducati916]

Full: https://www.marketwatch.com/story/c...against-israel-b88450ed?mod=mw_rss_topstories



Always on the w/e. LOL.

Interesting open for Aus. markets tomorrow.

With a really bad Friday in the US, it makes you wonder who knew what and when.

jog on
duc

 

[rederob]

1. And WHY are CBs buying more gold? The answer is primarily energy. If you can purchase your energy (oil) in your home currency and settle in trade balances with any deficit settled in gold (gold being used as a reserve asset), then your currency is floating as to gold. Your currency then comes under your own control. No longer will your currency be inflated/deflated by the USD. No longer will you have to accumulate USD or UST. You simply accumulate gold. Your currency may inflate or deflate as against gold, but it is your choice, not the Federal Reserve or US Treasury making that choice for you.

Here's a very interesting take on de-dollarisation and gold, with China using its gold as "security" (jump to 5:00 if you want the nuts and bolts):

 

[rederob]

View attachment 174786

Full: https://www.marketwatch.com/story/c...against-israel-b88450ed?mod=mw_rss_topstories

View attachment 174787

Always on the w/e. LOL.

Interesting open for Aus. markets tomorrow.

With a really bad Friday in the US, it makes you wonder who knew what and when.

jog on
duc

A lot will depend on the success or otherwise of Iran's attack as to how much market destabilisation occurs.
However, Iran is unlikely to stop at one assault, and has the capability of continuing the use of its drones for a very long time, albeit not in large number.
That big fall in POG's last hours before the weekend close looks like seeing a bounce back, perhaps with interest.

The elephant in the room is:

 

[divs4ever]

1. And WHY are CBs buying more gold? The answer is primarily energy. If you can purchase your energy (oil) in your home currency and settle in trade balances with any deficit settled in gold (gold being used as a reserve asset), then your currency is floating as to gold. Your currency then comes under your own control. No longer will your currency be inflated/deflated by the USD. No longer will you have to accumulate USD or UST. You simply accumulate gold. Your currency may inflate or deflate as against gold, but it is your choice, not the Federal Reserve or US Treasury making that choice for you.

Simply: Gold is now (or fast becoming) the oil currency. As the oil market is now some 14X larger than the gold market, that is the price differential that will close over time.

China is driving the break of oil being priced only in USD.

This week, lot's of action:

Yellen just returned from China: https://home.treasury.gov/news/press-releases/jy2232

View attachment 174777

Will China go along with this?

No chance: https://www.scmp.com/economy/china-...-avoid-cautionary-tale-japan-and-plaza-accord

View attachment 174778

So how can Yellen get a weaker USD if China will not revalue the CNY higher?


View attachment 174779

As already stated, China will not float the CNY against the USD. But China are already floating it against gold.

View attachment 174780

So if Yellen wants CNY up and USD down, all she needs to do is let the USD float FREELY against gold. This of course has not been the case:

So of course, the 'Paper Gold' market: https://reaction.life/dont-forget-the-golden-rule-whoever-has-the-gold-makes-the-rules/

View attachment 174781

The paper market was established in 1974:

View attachment 174783



However, you cannot (if you are an in-the-loop banker) let gold just run free when the banking system is short billions of USD paper gold. You have to close down unallocated paper positions.

The end of the LBMA is nigh - Research - Goldmoney

Basel 3 is on course to regulate the LBMA out of existence. And with it will go all the associated arbitrage business and position-taking on Comex, because most bullion bank trading desks will cease to exist. The only supply to buy-side speculators of gold and silver contracts will be...

www.goldmoney.com

View attachment 174782

What's behind China's gold-buying spree? – DW – 04/05/2024

For more than a year, China's central bank has been buying up large amounts of gold. The move, along with the wars in Ukraine and Gaza, have helped spike the price of the precious metal to new highs.

www.dw.com

Which is fine as far as it goes, but it really misses the point:

If the US cap the POG in USD terms and China lets the CNY float freely against gold, the CNY will weaken against gold, but, Chinese gold buys MORE OIL because China can settle net-net in gold for oil than does US gold, which is capped.

The above is actually China running a limited OPEN CAPITAL account.

Renminbi Usage in Cross-Border Payments: Regional Patterns and the Role of Swaps Lines and Offshore Clearing Banks

The paper examines the usage of the Renminbi (RMB) as an international payment currency. Globally, the use of RMB remains small, accounting for 2 percent of total cross-border transactions. Using country-level transaction data from Swift** for 2010–21, we find significant regional variations in...

www.imf.org

View attachment 174784

Now these locations have CNY clearing facilities and major gold trading hubs.

View attachment 174785

Voila...you have a limited open capital account.


2. The smaller BRICs are doing EXACTLY the same thing. Buying oil in their home currency and settling net-net in gold. Their currencies then weaken as against gold. Their Central Banks are buying gold. All will eventually capitulate and buy gold to buy oil. Japan will likely be next. If/when they do, that's it, the US will have to capitulate also.


3. This really depends on whether retail adopt silver as a poor man's gold to exit their countries fiat currency. China and India will do so I think, they have that recent and current history. The West has forgotten. Possibly it wakes up. A higher silver price is actually far more dangerous than a high gold price. Silver has a far wider industrial use. A significantly higher silver price has economic consequences. Gold never lost its monetary use. Silver did. If silver rediscovers its monetary heritage, watch out.

So in a 4 sentence summary:

Gold is now an oil currency.

The world economy cannot handle $100 oil, millions would starve to death.

The world will not even blink at $10K gold, gold has no other uses.

With a higher POG the POO falls in fiat terms.

jog on
duc

.. or .. the US can open up the oil exploration and production ( of oil , gas, and uranium ) in the US territories , but which will they sacrifice , the economy or the climate agenda ?

 

[qldfrog]

.. or .. the US can open up the oil exploration and production ( of oil , gas, and uranium ) in the US territories , but which will they sacrifice , the economy or the climate agenda ?

Eh good news for gold.
War started on supposedly missiles and drones attack on Israel from iran.true or false, after irak Covid and Ukraine, does not matter, very cynical but the Israel has started the war they wanted..Israel was not getting the support they wanted so far it seems...
I globally support Israel vs islam push..you know knives attacks by the lunatics,we just joined the club.. Armenia wiped out, Kosovo and EU falling etc..
And like the Serbs and Russia, fighting the green plague, but I am not blind either to their manipulations either
oil will go up, gold will boom and civilians will die

 

[divs4ever]

Eh good news for gold.
War started on supposedly missiles and drones attack on Israel from iran.true or false, after irak Covid and Ukraine, does not matter, very cynical but the Israel has started the war they wanted..Israel was not getting the support they wanted so far it seems...
I globally support Israel vs islam push..you know knives attacks by the lunatics,we just joined the club.. Armenia wiped out, Kosovo and EU falling etc..
And like the Serbs and Russia, fighting the green plague, but I am not blind either to their manipulations either
oil will go up, gold will boom and civilians will die

i see more oil sold outside of the US dollar

whether gold becomes the major exchange vehicle for oil purchases is yet to be seen ( rice or wheat might become the default commodity to exchange for oil , as an example )

civilians dying is just part of the climate agenda

 

[Cook Monster]

Looks like i

i see more oil sold outside of the US dollar

whether gold becomes the major exchange vehicle for oil purchases is yet to be seen ( rice or wheat might become the default commodity to exchange for oil , as an example )

civilians dying is just part of the climate agenda

Looks like its time to build a faraday cage and bunker down